tv Titans at the Table Bloomberg July 11, 2015 3:30pm-4:01pm EDT
betty: he is the country boy millionaire of dish network, charlie ergen. and he is looking to emerge with that guy, the t-mobile ceo john ledger. his plans for becoming the next big wireless company, and why he may be looking to emerge with that guy. charlie: they have done a fantastic job. but the famously tough boss faces questions about his management style. charlie: we have high expectations.
if you are not used to hikes occasions, you're not comfortable here. betty: join me and charlie ergen as he dishes it out here at "titans at the table." hello, i am betty liu. welcome to "titans at the table." dish network ceo charlie ergen has been known as something of a renegade, being thrown out of casinos for counting cards and other things. in the process of starting his company, he has become one of the richest man in america, worth more than $20 billion. he stepped out of the spotlight in 2011. just four years later, the founder is back in the hot seat. like the satellite tv business, ergen wants to be at the forefront of television change being at the top of sling tv.
he wants to buy assets of what he says can be used to build a legitimate competitor against at&t. when we sat down at "titans," i asked him to describe his plan. charlie: people are looking more for what they want to watch and not paying for what they don't want to watch. tv is everywhere. part of that is the technology is over the top that allows customers to do that. the second reservation is wireless. there is only two ways to do this, one is through the wire
and the other way is through wireless, and we started that about five years ago. we wanted to be part of that kind of technology revolution. the best place to do this in the marketplace is in wireless technology. betty: unless you have accumulated $50 million or $60 million? charlie: it is only really worth money when you put it to use and when you ultimately build a business around it and get discounted cash flows. that is what we are looking forward to the future. betty: charlie, does this remind you at all about the transformation of television and the on boarding of so many people in onto wireless. does this remind you of the early days of satellite television?
charlie: it does. back in the early days, people wanted to pay the premium for the satellite dish, and the bundles were smaller, the view was better, and the signal quality was more reliable, it was a better picture, and so now people are asking the question, why would you pay for ott and the similarities? ott is in so many homes and they don't pay for television as we know it. they pay for netflix and we take away some of those pain points with ott. you don't have to sign a contract, you don't have equipment to buy it normally. you can go on vacation and not pay for of subscription or to put it on hold for a month. it is immediate. you can watch the nba finals tonight and you don't have to
wait for an installer. betty: you don't have to wait out of work and wait for the cable guy. charlie: we have several many packs that you can add onto if you want to, including showtime and hbo, so it attracts a lot of people, particularly younger people who are not wanting to pay for more television today. we have a long way to go. we are not perfect yet. live tv is really hard, and we are doing things and inventing things like dynamic insertion that we haven't used before. it reminds me a lot of of what we have been selling. we had all kinds of technical problem and we just knocked them down one by one i won. we occasionally have a technical problem today. betty: but obviously you resulted then. charlie: we have resolved most of them, but we had a choice to make, it was either get out there and do what we don't know or wait and try to be perfect. but i think it will pay off for us now and for the people who are watching, you will have a
better experience today. betty: you have all of your cards close to your chest right now. you have your wireless assets, you have sling tv, you are looking at various options, so when are you going to make your play? charlie: i think, we have told people what we are going to do, and that is virtually the same thing for the last five years. our dream would be to use our spectrum to really enhance the
way that people connect and provide competition in the wireless business. not just in the television business but in the wireless business as well. if it is properly deployed, we can go to a lot of homes without wireless connection and give them cable. that provides minimal competition where there is not much today. i think we can do those things. how we do those things -- it is not that we haven't played our cards. we don't know. we don't know the best way to play that because you have to find companies that have a like-minded strategy. you like to have companies that want to move the same direction you want. you want to make sure that it is economic to your shareholders to move in a direction for the company. we are not that big a company. i think there are much bigger companies. betty: i think anybody would take a call from charlie ergen. charlie: i think anybody would take our call, but certainly the wireless industry is controlled by two companies today. there are 20 times bigger than we are. they are going to make their
moves and do their things and people are going to react to that. sometimes, you have to be ready to move when you see other things that happen in this industry. one thing we know for sure is the spectrum is viable and we will put it to good use, and we want to make sure it provides the best competition and the best product. betty: could charlie ergen's next play the merger with t-mobile? i will ask him if all of those reports make sense when "titans at the table" returns. ♪
at the table" and my conversation with charlie ergen. for years, ergen has been buying up gold. the wireless kind. he has bid in several auctions for the airwaves that transmit your phone calls or video to your devices. analysts estimate ergen is sitting on $60 billion worth of this gold. this has led many to wonder if he is on the cusp of merging with a wireless carrier, maybe t-mobile? he would not confirm the rumors but i asked him if it would be logical for the two companies to team up. charlie: i think there are a lot of positives to that. if there are willing participants but they have done a fantastic job being the
upstart company. john's team has captured the imagination of the public in terms of attacking the paying points we have in the wireless industry. their network is similar to our spectrum position. it fits in that sense and obviously, they will need more spectrum. those things make sense. there are things that don't make as much sense. obviously, controlled by a german company that has strategic initiatives in europe and the u.s. they may not be in a position where they want to do anything. we have other options that may be more attractive to our board and shareholders. i think there is a number of options out there. certainly, t-mobile is an option. betty: speaking of the german owner, there are reports one of the reasons why a deal might not happen with t-mobile is they do not value dish shares as highly as you value them. there is a disconnect. where do you think dish should really be treating it?
charlie: i never can predict the stock market. i would say that in the long run, our shares are undervalued, and i think the spectrum value we have -- we are probably undervalued with the spectrum position we have but we have to prove it to the marketplace. betty: undervalued by how much? charlie: i don't know. i can only speak as a shareholder. i have sold some shares recently. [laughter] charlie: i still have the shares
i had when we started the company. i believe in the long-term life of the company. i think our best days are ahead of us. i think it is how you can take advantage of the things that may happen in the marketplace to grow your business and you have to have a team that can adapt to change and be willing to change and i think we have that. our short-term focus is a merge with at&t, directv, a merger, if approved, we want to see what the conditions -- we publicly have not opposed the merger but it needs to be meaningful conditions, particularly protecting consumers for broadband rights. the incentive option is coming up and there is a set aside for new competitors. us and other companies will want us to be higher. it is what stands in the way of real competition, the fact they control the vast majority of the spectrum so they have better coverage.
betty: off the top of your mind, what is the number one condition you want to see for you to say "ok, this merger is ok?" charlie: i think the main condition is obviously at&t controlled a lot of the broadband pipes. what people do now is they bundle the video and broadband together where you really cannot pick the best video choice for yourself if you want the broadband. in some cases, they are the only provider. our only meaningful broadband provider in some areas. what we want to make sure is that broadband is sold as a standalone item and at a fair price to consumers. the other part is that they interconnect to the broadband pipe. the ramp to broadband -- you don't want that to be closed. net neutrality addresses some of that, but you and like to make sure the conditions of this merger or to make sure that it is going to survive court cases. betty: some people estimate the value of your wireless assets to be $60 billion or so. what will you do with those wireless assets? you're going to have to partner with a wireless company but if you don't, might you spin off those assets? might you separate dish into video and wireless spectrum? charlie: we have looked at different structures. we continue to look at different corporate structures so that you may end up with assets in different formations and the
reason you would do that is to have flexibility for how they could get put to use and the timing. we have looked at that. we have not made any decisions on that yet. it is something worthy of looking at. betty: is there anyone out there you would never partner with? charlie: i don't think we would ever say never. i don't think so. the people i know in this industry i have a tremendous amount of respect for what they have done. they all have their strengths and weaknesses. they have been very successful companies. they'll have things that are very meaningful. i think the most important thing for us is ultimately what will the value be to our shareholders and who will make the best use of our spectrum? so we can change the way people live by this connectivity and how that does change lives. we have done some of that on a small scale with satellite tv. we were the first to do local to local. we were the first to have a dvr for the american public.
we obviously have fought many battles to make sure that consumers have rights when it comes to watching tv, we have done a lot of good things. i hope our best days are ahead of us. if you change -- if you get people connected all the time, it changes every facet of your life from health care to education and to the way that you live, and it is a great digital divide conqueror because at all levels of the american -- it all levels the american economy, they all know how to use phones and tablets. even the children. betty: it is a great equalizer. charlie: it is a great equalizer. i think we can have a positive impact on america and society in terms of making sure we bridge that digital divide and one of the ways we can do that is with
i am betty liu. it was fun to sit down with charlie ergen, but according to some reports, it is not so fun to work for him. from reports in 2012 and 2013, dish network got some of the lowest ratings in the country for its work environment. ergen told me he is trying to change some things internally but also defended the culture he has built at dish. charlie: i think i am a really easy guy to work for and with if you are a high achiever and you want to achieve something. if you're just wanting a job, you are probably not going to like it too much here. i think dish is a culture for those people who want to achieve something. and there is some uncertainty,
as you know, with what you can do with the wireless. our shareholders don't know exactly, so it takes a little bit of bravery as a shareholder. i think even for employees, they like to know what will happen tomorrow but we don't always know what is going to happen tomorrow. it is a special -- it takes trust in your management, a bit of an adventurous spirit to work here. you are not in a training program, so you have to be more of a self-starter. for those people who like that, we have people who started in the warehouse that are executives. people who started in call centers who are executives now. we have people who are achieving their own internal potential and they are passionate about what they are doing. they're having a lot of fun. betty: if you were to write a management book, what would the title be? charlie: i couldn't write a book, number one, >> the following is a paid program. -- charlie i couldn't write a book, number one, but i do think that the culture of a company is important and i think that companies don't have a good track record of surviving a founder. the ones that do have a culture that carries on. not to say a culture would not evolve but it is what carries on, not the people. once you establish a culture, you have to hire and train into that. we have made some mistakes in the past where we got complacent and did not do a good enough job upfront to make sure people understood what our culture was about.
but i think what generally people like is they can make a difference. they can make decisions and do things quickly. whereas a lot of companies, it is a lot of data, analyzing. we have high expectations. here, we are moving pretty quickly. so the negative part of that is that we have high expectations, so if you are not used to that, you are not as comfortable. i remember when my kids would be in the relay and in the track meet at school and the person who came in first and last all got medals for participating. but we don't do that here. you don't get a medal for participation. betty: ergen went on to tell me that he thinks companies can be demanding while keeping their employees happy but it is clear for this ceo, winning is what ultimately counts. so our conversation turns to competition.
as the paid tv market morphs, will there be a shakeout and who will succeed? charlie: i think there will be new technology and new businesses, i think there will be some some carcasses that don't make it just along the side of the road. i just hope we're not one of them. you know, we don't mind other people being successful. we try to do it ourselves and think how we are going to be successful and we will be. betty: is it primarily on price? charlie: i think also user interface and how the user -- ease of use. if you can pick it up and use it without an instruction manual. certainly, apple has pioneered that but we have done a good job of that ourselves. we have a lot of room for improvement on sling tv.
it has a pretty good user interface for 20 channels and now we have 60 channels. we have to make improvements there but it will be flat on a number of issues. distribution, real estate. a lot of issues but price will be one of the issues. betty: given that, is apple tv -- the fact they have not revamped in several years -- are they little too late to the game? charlie: no, i think we are still in the first inning. i think there is room for multiple entrants. we will probably see multiple entrants at future points in time. betty: where do you see video in five years? charlie: in general, almost every video is in the cloud. we have access to that video and the next generation probably doesn't know video by channels, they probably don't know it by comedy central, they know it by this particular show, by the program. there is a loss of identity probably that goes on between the networks and the shows. it just becomes shows. netflix has proven that, right?
you get program info from viacom or discovery but you don't know it is their programming. i was always a little baffled why the programmers did that. but that cow is out of the barn. you are just going to talk to your phone or device and say this is what i want to watch and it will pull it up. and you are going to start watching it. you're not going to have to worry about pushing a button or recording something, or doing anything. you have access on demand. whether it is a 1930's movie or the latest sporting event. betty: you distribute content but would you ever go into creating content? charlie: i doubt it. we barely have expertise to do what we are doing today. we are trying to get better, but we have no expertise on content. the only thing we ever created
was a charlie chat. i would sit and talk to our customers like this when i was ceo and it was a pretty bad show. that is the best we have ever done. betty: have you reinstituted that? charlie: i haven't. the phone is not ringing off the hook to bring back the show. betty: that wraps up this special "titans at the table" conversation with charlie ergen. you can find more episodes of our show on bloomberg.com, along with in-depth coverage of today's news and conversation with the world's business leaders. i am betty liu. thank you for watching "titans at the table." ♪ . .
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